Thinking Foreign Aid? Think Again

January 29, 2001

The U.S. Agency for International Development is promoting foreign aid as a benefit to U.S. businesses. Its official website proclaims that "the principal beneficiary of America's foreign assistance program has always been the United States."

U.S. AID programs last year cost taxpayers about $7.5 billion.

The agency says that nearly 80 percent of its contracts and grants go directly to American firms -- and others note that such funds are often spent on U.S. consultants, their rents, office equipment, cars, and support staff in Washington.

Many of the Washington companies that get aid contracts are staffed by retired U.S. AID employees skilled in writing proposals to appeal to their former government colleagues, according to reports -- and some employ spouses of current U.S. AID officials.

One of the largest and most successful companies in the field is Chenomics -- majority shares owned by a former assistant U.S. AID administrator -- which reported $85 million in revenue for the last nine months of 1999 and net income of $1.7 million, for a return on equity of 34 percent.